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"id": 251693,
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"speaker_name": "Mr. Ojode",
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"legal_name": "Joshua Orwa Ojode",
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"content": "Mr. Temporary Deputy Speaker, Sir, this is a very important Motion. I am trying to encourage the Government to subsidize the price of kerosene so that the rural folk have a chance to use this product. The only way for the Government to do this is by reducing Excise Duty by two shillings per litre. I also want the Chair, together with my colleagues, to note that we have four components of taxes in petroleum products. They are: Value Added Tax (VAT), Excise Duty, the Petroleum Development Levy (PDL) and the Roads Maintenance Levy (RML). That amounts to 46 per cent of Government taxes. If we are a serious country and we want to lower the prices of commodities, reduce transportation costs and alleviate poverty, we must do something on Excise Duty. I know my colleagues will ask me what will happen if we reduce the taxes or the levies for the Government. You are aware that even if we reduce two shillings per litre on Excise Duty, the two shillings can as well be transferred to commodities like beer and tobacco. My colleagues were asking me why I am not suggesting for zero-rating of kerosene. I said that though it is not good for us to zero-rate kerosene, it is the Government to think of zero-rating, not Mr. Ojode. When the Government zero-rated LPG, the price of the 13 kilogramme LPG is still going for Kshs1,360 to date. Dealers increase prices on a daily basis. I said at one time that the multi- nationals are controlling the prices of oil as and when they want. Diesel and kerosene are a by- product of super petrol. Why should kerosene, for example, with Excise Duty go for 7.205? Mr. Temporary Deputy Speaker, Sir, I would like to give this House a breakdown of the taxes, which we are paying on this particular product. My tabulation is based on the February prices, which indicate that Excise Duty for kerosene was 7.205, super petrol I9.895 and diesel 10.305. Add the road maintenance levy to this, which is 5.80 for super petrol and 5.50 on diesel. For petroleum development levy they charge 40 cents for kerosene, super petrol 40 cents and diesel 40 cents. Total taxes on kerosene, with Excise Duty, come to the level of 7.605, super petrol 26.095 and diesel 16.505. The cost of importation to Mombasa, including all taxes and KPC transport cost, which is Kshs1.80, 39.80 for kerosene, super petrol 37.030 and diesel 36.100. The cost up to Nairobi, everything inclusive, is 47.405 for kerosene, super petrol 63.125 and 53.535. Now, the pump prices, as of last week, were kerosene Kshs54.00 per litre and super petrol 74.00. As a matter of fact, two days ago, super petrol was going for Kshs78.00 and diesel Kshs 64.00. So the margins are: on kerosene 6.595, super petrol 10.875 and diesel 10.465. These are the amounts which are shared between the dealers and the multinational oil companies. The dealers receive a margin of Kshs2.50 from kerosene while the oil companies get Kshs4.095. From super petrol the dealer gets Kshs2.50 and the oil company gets Kshs8.30. From diesel the dealer gets Kshs2.50 and the oil companies Kshs7.90. These price tabulations show that the oil companies make more money than the dealers. In order for us to avoid the drought we had, we must plant trees. We experience drought in this country because of logging. Wananchi are cutting down trees because they use wood as fuel. The only thing the Government can do is to support this Motion, so that Excise Duty can be April 26, 2006 PARLIAMENTARY DEBATES 699 reduced by Kshs2.00. I am not talking about other duties. I wish to give one example as to why I am suggesting that Excise Duty could be levied on beer and tobacco. A bottle of beer in our local pubs costs Kshs55.00, but within the City of Nairobi a bottle of beer costs between Kshs55.00 and Kshs240.00. It is between 400 to 500 per cent and the source is the East African Breweries Limited (EABL). Even the person who is selling beer at Kshs55 in the rural pub is still making profit. Why do we, therefore, not reduce our Excise Duty by Kshs2 and then levy it on tobacco and beer? Mr. Temporary Deputy Speaker, Sir, if we are telling Kenyans to go into tissue-culture in the planting of trees, they should take heed. Little do they know that if we do not have trees, we will never have rain. As at 1980, the forest cover in Kenya was 1.7 per cent against 10 per cent which is required internationally. What is going to happen to 9.7 per cent? What is going to happen to the rest of the percentage? We must do something on tree planting! I believe all oil importers and wholesalers should be allowed to make a maximum of Kshs5 per litre. It should neither be Kshs10 nor Kshs14. They can challenge me if they want because I have the figures. I have a tabulation that shows what they are making. This came as a result of the 1994 liberalisation when the price controls were removed. When the multi-nationals are in a club, they agree to increase it by Kshs2 or Kshs3. That is exactly what they do because this is a competitive market. How come M/s Shell, M/s Kobil and M/s Kenol give the same rates yet they are competing? That is the question we have to ask. That is why I agree with the Managing Director of Namibian Oil Company who said that all African oil producers should have a two-tier system of pricing where the products that are being exported to Western countries should have their own prices that will be higher while the ones which are being produced for Africa should also be different. That is the only way African countries can encourage their people to use petroleum products. Mr. Temporary Deputy Speaker, Sir, let me turn to liquified petroleum gasses (LPG). You will find out why it is zero-rated. Whose interests were we taking into account? I believe that one must have been compromised to zero-rate the LPG. In any case, if I was the Minister for Finance, I would have zero-rated paraffin and not LPG. I am urging the House and my friends to consider reducing the Kshs2 in order for the rural folk to gain. There is no way, whatever we say, we can alleviate poverty levels in this country if we do not subsidise the oil sector. If we look at the transport costs, if you want to transport goods from Mombasa to Nairobi, an eight-tonne lorry will charge you between Kshs60,000 to Kshs80,000. That is coupled with problem of the infrastructure that we have. There is no way that we will ever decongest the pile-up on our roads when we are charging excessively. I tend to think that the only way is to try and bring the prices of oil and petroleum down. When I introduced a Bill here that went through, afterwards I was appointed an Assistant Minister for Education, Science and Technology. However, that Bill is still lying in the shelves to date. I would like to encourage the Minister for Energy to make sure that oil companies are not allowed to arbitrarily increase their prices. We should not compromise all our needs with what they want. It is better for us to have checks and balances. We are talking about liberalisation. However, if we continue to liberalise everything, we will end up having the same problems we are experiencing now. It is important for each one of us to think about what the rural folks are eating. What are the rural folk eating? What can we do to help our constituents? The only way to help our constituents is to persuade this Government not to be compromised on what to zero-rate and what not to be zero-rated. I believe the Government was compromised and that was why it zero-rated Liquefied Petroleum Gas (LPG) products. We should encourage our people to think in terms of what should be eaten tomorrow. If all of us live on a dollar per day, what can we do? Mr. Temporary Deputy Speaker, Sir, if you go to Libya, you will learn that we can negotiate with that Government to give us concession on oil imports so that we do not import oil 700 PARLIAMENTARY DEBATES April 26, 2006 from Western or Asian countries at the current prices. As we speak, a barrel is costing US Dollars 66. Yesterday, I learnt that a barrel was going for US Dollars 70. I understand it is now going at US Dollars 72. Even if the prices go down, multinationals will never reduce their petrol prices. Why can the Minister for Energy not force inspectors to check what the current prices are? Why should we keep on being charged high rates despite the fact that crude oil prices have gone down? That is the fundamental question I would like to ask the Minister for Energy. Is it through collusion? Is he colluding with multinationals? I request my colleagues to support this Motion so that our people can have an easy time with everything they do. I beg to move."
}